Hi everyone - opening up a post to see what people's thoughts are on buying a 4 unit ((2) 2b/2b + (2) 2/1)across the street from a future 160+ unit net new affordable housing complex. Less about the "is the 4unit a deal (spoiler: it's almost a deal)" and more about the pro's/cons of investing that close to a LARGE dev project and would it be beneficial in the long run.
What I see so far :
- Pros - consistent tenant flow (waitlist for big complex) and market rental rates to build against and measure - Pros - Affordable housing in Bay Area is still $2250+ for a 2b/1b apartment. - Cons - tenant experience during development and traffic congestion after - Cons - unknown property appreciation as the new building changes dynamic of community
Real Estate Broker · Albuquerque, NM · Member since 2015 · 281 posts · 232 votes
2y
It could be good. The larger property will set some pricing based on a new vintage that will impact the value of your rents. You won't have the amenities, but you'll know that you should be able to come in just under their rent tiers. The 4's I've seen in our town near larger communites don't suffer from the proximity.
The question I have is the "affordable housing" project specs. Is it an LIHTC project or just "affordable" meeting HUD's definition of affordable? They are completely different and may attract different resident base. Check that out and be clear on it as a Low Income property is different than an Affordable Housing project. If the project is an 80% SeCT 8 housing property or no? The demographic of tenant could spill into your 4 if you buy.
Investor · Pittsfield, MA · Member since 2019 · 88 posts · 49 votes
2y
Looks like it could be a great buy to me for all the reasons above. Might be worth doing a little due diligence on the company building the property. Do they have other properties within a days drive? Probably a portfolio website where they have their other stuff listed. If it isn't within a days drive, maybe at least a good street view 'drive by' to take a peak at other stuff they're operating. I'd certainly want to know. My gut says it'll help you out and like mentioned above set a clear bar for rent rates but ya never know until you look under the hood a bit.
@Alex Todd I’ve got several units close to a 100 unit apartment complex and if anything issues with the overall management of the new complex and promises made of amenities that are still yet to be completed 2 years later and still haven’t been finished have just been driving tenants from that complex to me. If I had another 20 units available I would be able to rent them from the tenants that are vacating the 100 unit complex as their leases expire.
Rental Property Investor · Member since 2023 · 1k+ posts · 922 votes
2y
You should make sure to let your affordable housing neighbor know when you have a vacancy. Many people will not income qualify to live there in the bay area (income too high). Those referrals are gold.